Calculating EFN The most recent financial statements for Moose Tours, Inc., appear below. Sales for 2012 are projected to grow by 20 percent. Interest expense will remain constant; the tax rate and the dividend payout rate will also remain constant. Costs, other expenses, current assets, fixed assets, and accounts payable increase spontaneously with sales. If the firm is operating at full capacity and no new debt or equity is issued, what external financing is needed to support the 20 percent growth rate in sales?

MOOSE TOURS, INC.

2011 Income Statement Sales Costs Other expenses Earnings before interest and taxes Interest expense Taxable income Taxes Net income Dividends Addition to retained earnings

$30,300 70,905

$836,100 650,700 17,100

$168,300 12,600

$155,700 54,495

$101,205 MOOSE TOURS, INC.

Balance Sheet as of December 31, 2011 Assets Liabilities and Owners’ Equity Current assets Cash Accounts receivable Inventory Total Fixed assets Net plant and equipment Total assets

$ 24,035 38,665 82,555

$145,255

$392,350

$537,605 Current liabilities Accounts payable Notes payable Total Long-term debt Owners’ equity Common stock and paid-in surplus Retained earnings Total Total liabilities and owners’ equity

$ 64,600 16,150

$ 80,750

$150,000

$130,000 176,855

$306,855

$537,605